Trading the Trend on Multi-Time Frame

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Have you ever swum against the current in a pool, river, beach or ocean? Whichever one you did swum in, I bet it’s a hell of work, as it will take you more time covering your presumed distance. It won’t take long before the muscles of your body get fatigued as you are burning so many calories to overcome the current.  This current is the same as the trend in Currency markets or Stock markets. If you are trading against the trend, it takes more time and energy for your trades to hit your take profit except you are scalping. No wonders the saying “the trend is your friend” is so popular. I thought this was a fallacy till I had miserable trading experiences which made me realize it’s time to find out why I have to ride with the trend when trading the markets.

Conducting so much study and experiment on this hypothesis, I began to fall in love with the trend. In fact I didn’t make the trend my friend; I ended up making it my best friend and soul mate. Winning trades started rolling in as it was easier predicting the market with just riding with the trend. I began to win seven out of ten trades without hassles. As I went deeper into trading trends, I unveiled an important weakness of the market, which is trading trends on multi time-frame.

A trend can be divided into three forms depending on the time frame the trader is using at the moment to spot entries and exits. These three forms of trend are called Short term, Medium term and Long term. The 1Minute, 5Minute and 15Minute timeframes are meant for short term trends while the 30Minute, Hourly and 4Hours are meant for Medium term trends. If you are an intraday trader, these timeframes are ok for you. On the contrary, the daily, weekly and monthly timeframes are meant for investors who leave their trades for a very long period of time. Most retail traders don’t fall into this category; we can’t compare ourselves with Warren Buffet or George Soros who trade with billions of dollars. Rather we can join them in their trades whenever they want to make a home run. In this scenario, all you have to do is waiting for the intraday trend to synchronize with the long term trend.

This method of trading increases your odds, all you need to do is to master the act of balancing your trading psyche. Whichever indicator you love trading with, remain patient and allow it point towards the same direction in all time-frames. Have it in mind that loosing trades are unavoidable in trading currency market; in fact it is inevitable, as nothing in this world is a hundred percent except from God.  Imagine an entry of 1minute to Monthly all synchronized towards the same direction, doesn’t it taste juicy? These scenarios most times present themselves when two trading sessions overlap, so if you are good at timing them, you will grow your account tremendously. If you are a part time trader, probably because you have another job, you can use the 4hours, daily, weekly time-frames by trading their trends. All that is required from you is coming to update yourself every four hours for fresh entries or exits.

Most traders find it boring to wait for this set up due to lack of patience. What they fail to understand is that the market only trends twenty five to thirty percent of the time. You have to possess remarkable hunting skills like the lion to survive in this jungle called the currency market.  Do you want to keep making these big boys richer by ripping your account off gradually till there’s nothing? The answer to this question lies on you!

Article by:

Sakoto Oladayo

Forex Analyst

InstaForex Nigeria Office

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